Gustav Resch

Promotion of renewable energy sources: effects on innovation

To meet existing and future targets for renewable energy sources, national governments, EU policymakers and electricity market stakeholders have a pronounced interest in designing optimal instruments for the promotion of Renewable Energy Sources in the Electricity sector (RES-E). This paper characterises the present status of the RES-E markets in Europe, the portfolio of promotional instruments currently applied across the EU and the progress the Member States have made in reaching the targets. In particular, existing support schemes are analysed in terms of their effectiveness in achieving additional RES-E generation and in terms of their ability to meet the targets at minimum costs (efficiency). Our empirical findings show that instruments which are effective also tend to be efficient. Further, the short- and long-term diffusion of specific RES technologies depends on the support schemes in place. Finally, the paper discusses the compatibility of different instruments to support RES-E in the context of more general energy policy objectives.

Economics of large-scale intermittent RES-E integration into the European grids: analyses based on the simulation software GreenNet

Market integration of Renewable Energy Technologies for Electricity (RES-E) generation is one of the core topics in the energy policy agenda of the European Commission (EC). However, legislation in this context still faces a variety of lacks (e.g. ignoring unbundling principles) in almost all countries of the European Union (EU). The recently finished EC-Project GreenNet addresses these existing inadequacies and models dynamic time paths up to the year 2020 for a variety of least-cost RES-E grid integration cases in the EU for different degrees of unbundling and different cost allocation schemes. The major results derived from GreenNet clearly demonstrate that the degree of unbundling and the implemented allocation principles of different disaggregated cost elements significantly influence RES-E deployment both on national as well as on EU level up to the year 2020. The major conclusion is that serious unbundling and correct allocation of RES-E related grid integration costs only guarantee the fulfilment of the ambitious EC goals with minimal costs for society.

Prospects of Renewable Energy Development in the European Electricity Sector: Results of the Simulation Tool Green-X

This paper presents the results of selected simulation runs based on the computer model Green-X. The results suggest that the most significant efficiency gains -measured in terms of premiums to support renewables - can be achieved by optimising national RESE support measures - between two thirds and three quarters of the overall cost reduction potential can be attributed to the optimisation of national support schemes. Further efficiency improvements at a considerably lower level (at about one quarter to one third of the overall cost reduction potential) are possible through an EU-wide harmonisation of support schemes provided that a common European power market exists. Regional coordination represents an essential step towards EU wide harmonisation; half the additional cost benefits of an EU-wide harmonisation can already be tapped through regional coordination compared to the nationally optimised schemes. If a harmonised policy is pursued, technology-specific support is superior to non-specific support with respect to cost minimisation.

Experience Curves vs Dynamic Cost-Resource Curves and their Impact on the Assessment of the Future Development of Renewables

The recent development of several Renewable Energy Sources for electricity generation (RES-E) is characterised by decreasing investment costs and limited resources. In this paper we analyse the ambiguous role of these two effects and the consequences for deriving effective promotion policies for RES-E. Dynamic costresource curves will be derived which combine both approaches. They represent a tool to assist policy makers in deriving efficient and effective promotion instruments. By its application results can be gained with respect to both costs (i.e. efficiency) and penetration (i.e. effectiveness). Due to the combined consideration of resource restrictions and dynamic cost developments, dynamic cost-resource curves assist in deriving the optimal time-path for policy instruments.

Organising a joint green European electricity market: the model ElGreen

In this paper, the features and the most important results of the computer model ElGreen will be presented. With the help of the computer model it is possible to simulate various promotion strategies for different technologies in all EU countries. Policies that can be selected are the most important price driven strategies (feed-in tariffs, investment subsidies, tax incentives), capacity driven instruments (tradable green certificates, national or international wide trading system) and a voluntary green pricing system.

Assessment of RES technology market values and the merit-order effect – an econometric multi-country analysis:

This study presents an assessment of both the merit-order effect and the market values of electricity generated from variable renewable energy sources, namely wind and solar photovoltaics. The historical price development in several European countries – that cover 73% of the renewable energy source share in Europe’s regional electricity markets – has been taken into account. To gain insights into the impact of renewable electricity on prices, market values and the merit-order effect were calculated using a multivariate regression analysis and ex-post calculations. All the countries analyzed show a consistent, negative impact of renewable electricity on electricity spot market prices and a decreasing market value of renewable energy source, possibly attributable to increased shares. The coefficients are economically and statistically significant. This study provides insights into a large geographical spread of European electricity markets, enables a comparison between countries, and therefore has valuable implications for policy makers.

A concept to assess the costs and benefits of renewable energy use and distributional effects among actors: The example of Germany:

This paper describes a concept for the detailed assessment of the costs and benefits of renewable energy technologies deployment. A first quantitative impact assessment of German renewable energy technologies use is conducted from a historical perspective based on this comprehensive method. It includes costs and benefits at three different levels – energy system, micro- and macro-economic. The findings suggest that, at the system level, the generation costs in the electricity and heat sector are partly compensated by positive effects mainly from avoided emissions due to the use of renewable energy technologies in the electricity and heat sector. On the electricity market, small power consumers bear a very large share of the policy costs, while others might even profit from renewable energy technologies use. However, a comprehensive assessment that accounts for all the different negative and positive effects in the long term, including distributional effects, is more challenging. The concept applied here allows a differentiated comparison of a wide range of effects including aggregated costs and benefits as well as how these are distributed across different economic actors.

A prospective assessment of costs and benefits of renewable energy use in the European union

This article presents the outcomes of an assessment of expected costs and benefits of future renewable energy use in the European Union by 2020 and beyond. A binding European Union-wide renewable energy systems target of achieving at least 27% renewable energy systems share in gross final energy demand by 2030 was adopted by the Council of the European Union in October 2014. This has to be seen as an important first step in defining the framework for renewable energy systems post-2020. Other steps, like a clear concept for and an agreement on the effort sharing across Member States have to follow. For doing so, clarity on associated costs and benefits of the future renewable energy systems expansion across European Union Member States appears highly beneficial. The aim of this article is to contribute to the renewable energy systems policy debate, providing an indication of costs and benefits resulting from increased renewable energy systems deployment within the European Union in the 2020 and 2030 frameworks. Within the discussion of costs and benefits, we follow a standardized concept that takes into account the diversity of policies in force and depicts the cost and benefits of renewable energy systems deployment at different levels, avoiding double counting or mixing up of effects. The outcomes of the analysis presented here remain, however, incomplete, focussing on certain indicators and on a related cross-country comparison rather than presenting a complete overview on expected impacts of future renewable energy systems deployment within the European Union.

Chapter 5 – The Growing Impact of Renewable Energy in European Electricity Markets

In recent years, remarkable increases in renewable generation are taking place in several European countries, notably in Germany. In this chapter, the historical growth, the current situation, and the future prospects for renewable resources for electricity generation in Europe are analyzed. The core objective is to investigate the likely effects of a further uptake of electricity from renewables on the prices in European electricity markets and on their integration into the grid. The major effects of these developments on electricity markets will be: (i) a much higher price volatility from hour to hour and day to day; (ii) an increasing relevance of intraday markets; (iii) higher costs for fossil plants due to higher shares of investment depreciation costs; (iv) increasing relevance of storages and “smart” grids, (v) higher shares for balancing markets; and (vi) the increased complexity in balancing supply and demand over time.

Lessons Learned from Recent Promotion Strategies for Electricity from Renewables

To increase the share of renewable energy for electricity generation is a major target in many countries world-wide. Yet, to bring about a significant breakthrough a series of barriers has to be overcome and proper policy strategies have to be launched. In recent years, a wide range of such strategies has been implemented in different EU-countries. The major ones were investment subsidies, feed-in tariffs (FIT), tax incentives, quota-based tradable green certificates (TGC) and tendering systems. Which of the different instruments is most effective for increasing the dissemination of renewables still remains a controversial topic. The major objective of this paper is to evaluate the performance of various strategies in EU member states in recent years and to present the lessons learned.